<tit>GAZPROM TO BUILD THE NORTH EUROPEAN GAS PIPELINE FROM UKRAINIAN PIPE
Russian fuel and energy sector is getting reoriented at purchase of cheap pipe from Ukraine. In 2005, Ukrainian pipe industry increased pipe production 12.6% to 2.3 million tons. Along with this, supplies of Ukrainian large pipes to Russia grew by more than 15%. It is expected that by 2007, growth will reach 30%. Experts remark that this data shows that Russian pipe consumers are getting reoriented at cheap products of Ukrainian companies.
The largest supplier of Ukrainian pipes to Russia is the Khartsyzsky pipe mill (KHTZ), the leader of the Ukrainian pipe industry. For a few years, KHTZ was increasing not only its output but also the share on the Russian market of large pipe. Year 2005 set a new record in operations of KHTZ in the last decade. The company produced 545,400 tons of large pipe or 26.3% more than in 2004. The main consumers of the pipes made by KHTZ are Russian companies Gazprom and Transneft, which buy more than 70% of KHTZ products necessary for development of a number of strategic projects of Russia, the largest of them being the North European gas pipeline (NEG) and Eastern Siberia-Pacific Ocean oil pipeline.
According to sources close to the management of KHTZ, the Ukrainian company and Gazprom already reached agreements on large-scale supplies of large pipe for the new strategic NEG project. In the framework of the NEG project KHTZ will supply about 600,000 tons of large pipe to the Russian gas monopoly. Broadening of the mutually beneficial cooperation is also manifested by the fact that management of KHTZ is currently negotiating with Gazprom on establishment of joint engineering companies for comprehensive development of oil and gas fields and some oil and gas processing plants in the territory of Russia. One of these projects is development of the Shtokmanovskoe field. KHTZ can produce more large pipe than is implied by the agreement between KHTZ and Gazprom, that is up to 1.6 million tons of large pipe a year. Such high production capacity in combination with guaranteed orders opens broad prospects for KHTZ. According to some analysts, in a few years KHTZ will occupy about 40% of the Russian market of large pipe. This actually means that Ukrainian pipes will be used in construction of almost one-half of Russian trunk oil and gas pipelines. Some experts are even inclined to speak about formation of a strategic infrastructure axis of Ukrainian KHTZ-Russian Gazprom and Transneft. Thus, they say that despite that the NEG is built bypassing Ukraine Russia will hardly do without Ukraine and Ukrainian pipe in transportation of gas to Western Europe.
<ref>Vremya Novostey, February 03, 2006
<tit>PUTIN DEMANDS TO REACT STRICT ON CASES OF BARRACKS HAZING IN THE ARMED FORCES
Vladimir Putin asks the Office of Public Prosecutor to react strict on all facts of barracks hazing in the army. "One must pay much more attention for defense of personal rights and social guarantees of the soldiers and react on all cases of torturing and barracks hazing strictly to the limit", the President declared last Friday at the expanded board of the Prosecutor's Office of the Russian Federation. "As well as for any attempts to conceal these infringements", he added. The President emphasized that "this question is a key one - for both developing of the Armed Forces and for increasing of their battle alertness and social prestige". He reminded that in 2006, much expenses were provided for the defensive ability of this country, and the volume of the state defense order was increased by at least one quarter. In this connection, he stressed the necessity of the strict control over the modernization of the Armed Forces. "In the sphere of technical modernization of the Armed Forces, one must arrange things around strict control", Putin said. He asked the Prosecutor's Office to pay much attention to that.
<tit>RUSSIAN GDP DOUBLED IN DOLLAR TERMS
In the last three years, Russian GDP doubled in dollar terms. This happened due to growth of economy, growth of prices and rouble appreciation. GDP per capita in dollars grew even faster and exceeded $5,000. According to this parameter, Russia approached East European countries.
In May of 2003, President Vladimir Putin demanded the government "at least to double the GDP in a decade." Putin meant doubling of the GDP in rouble terms adjusted for inflation. The President did not say by which date the government had to fulfill this task.
According to the Federal Statistical Agency, in 2005, Russian GDP grew 6.4%. In the last three years, nominal rouble GDP grew 100% from 10.831 trillion roubles to 21.665 trillion roubles. GDP in dollar terms grew even faster. Whereas in 2002, it amounted to $345.44 billion in 2005, it amounted to $766 billion. Yaroslav Lisovolik, chief economist of UFG, remarked that this happened due to real GDP growth of 22.4% in three years. Inflation contributed to this growth too. Yevgeny Nadorshin, economist of investment bank Trust explains, "Every year the same volume of products costs more and more in dollars." Between 2002 and 2005, consumer prices grew 38.7% and prices of manufacturers grew even faster 64.3%. Export prices were growing too. Whereas in 2002, a barrel of oil cost $23.90 on international market in 2005, it already cost $50.50. The third factor of growth of the dollar GDP was dollar exchange rate weakening 10.4% in three years.
Due to decrease of the population by approximately 2% between 2002 and 2005, nominal GDP per capita grew faster. In 2002, it amounted to $2,383 and in 2005, it grew to $5,364. According to methods of the World Bank that take into account nominal GDP per capita adjusted for average exchange rate of the national currency in the last three years, Russia is in the group of countries with average low level of incomes now, says Alexander Morozov, chief economist of HSBC Bank for Russia and Ukraine. Due to its achievements in 2006, Russia will most likely outrun Turkey and Brazil according to GDP per capita. At any rate, Morozov presumes that even if the next three years are equally successful Russia will not enter the next group with average high incomes. The economist explains, "The threshold there amounts to $10,065 now and we will not cross it earlier than in 2010." However, according to parity of purchasing power of GDP per capita Russia approaches East European countries. According to the CIA, in 2005, this parameter in Russia amounted to $10,700. This is more than in Brazil ($8,000) and Turkey ($7,900) and a little less than in Croatia ($11,600), Poland ($12,700) and Latvia ($12,800).
Lisovolik is convinced that "if the speed of growth is preserved very soon Russia will catch up with Eastern Europe." According to ING Bank, by 2008, GDP in dollar terms (without taking into account purchasing power parity) will grow in Russia by 61% to $1.2 trillion ($8,591 per capita). In any case, in the future high oil prices will be a less reliable basis for growth in the dollar GDP because rouble appreciation will have negative impact on growth of the real GDP. To date, this factor was not noticed very much because Russia had a devaluation cushion because of the crisis of 1998.
<ref>Vedomosti, February 03, 2006
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